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ADA Forecast: SEC Ruling on Ripple and Coinbase Key to Market Sentiment

By:
Bob Mason
Published: Sep 2, 2023, 04:19 GMT+00:00

Increased SEC scrutiny on Ripple and Coinbase puts pressure on ADA despite Cardano network growth

ADA technical analysis - FX Empire.

In this article:

Key Insights:

  • Cardano (ADA) experienced a minor decline on Friday, ending the session at $0.255 after a range-bound morning.
  • IOHK reported upward trends in the number of projects, native tokens, and transactions on the Cardano network.
  • SEC scrutiny continues to impact investor sentiment and pressure ADA and the broader crypto market.

Friday Overview

On Friday, cardano (ADA) slipped by 0.39%. Following a 3.76% slide on Thursday, ADA ended the session at $0.255. After a range-bound morning, ADA rose to a high of $0.259 before falling to a low of $0.252.

IOHK Reports Larger-than-Usual Increase in Projects on the Network

The Input Output HK (IOHK) Weekly Development Report was in focus on Friday.

According to the September 1 Weekly Development Report,

  • Total number of projects launched: 142 versus 138 (previous week).
  • Project building on the network: 1,280 versus 1,277 (previous week).
  • Native tokens (total) stood at 8.79 million, up from 8.75 million (previous week).
  • Token policies increased from 78,465 to 78,655.
  • Transactions increased from 73.9 million to 74.2 million.

The uptrend in projects was bullish. However, market sentiment toward the SEC overshadowed the latest project numbers.

SEC Scrutiny of the US Crypto Market Leaves ADA Under Pressure

The SEC regulation by enforcement mantra continues to impact investor sentiment. While there are no SEC cases against Cardano, SEC Chair Gary Gensler threw all cryptos, except BTC, into the SEC securities basket.

The SEC classification of ADA and the broader crypto market leaves the market exposed to the outcome of two ongoing cases. Significantly, the rulings from the SEC cases against Ripple and Coinbase (COIN) will likely define the US digital asset landscape.

ADA and the broader market have suffered amidst increasing uncertainty about the US crypto landscape. A successful SEC appeal of the Judge Torres ruling and a win against Coinbase would be detrimental.

While the Grayscale victory provided brief relief, there is also the threat of the SEC appealing the Court ruling. It is also worth noting that Grayscale won an appeal forcing the SEC to revisit the application. The SEC could deliver a similar disapproval in the coming months.

For ADA, the advancements on the Cardano network have failed to translate into price gains. ADA price levels will likely concern ADA investors who have considered comments from Cardano founder Charles Hoskinson.

In September 2022, Hoskinson promised an influx of new projects after the Vasil hard fork. Projects on the Cardano network have risen but not by the number investors may have hoped for.

Before the Vasil hard fork, projects launched on the Cardano network had stood at 98, with 1,100 projects actively building on the Cardano network. The number of projects increased by 44 year-over-year. The number of projects actively building on the Cardano network rose by 180.

The Saturday Session

Investor sentiment toward ongoing SEC cases against Ripple and Coinbase will continue to influence. Considering the IOHK Weekly Development Report, the increase in project numbers was insufficient to support a breakout session.

However, dip buyers will provide support going into the weekend. ADA declined by 16.61% in August but avoided the June low of $0.220.

ADA Price Action

Daily Chart

The Daily Chart showed ADA at the trend line and the $0.255 support band. Significantly, the $0.255 support band is confluent with the trend line. A fall through the trend line would signal another sharp decline and give the bears a run at sub-$0.250.

A 14-Daily RSI reading at 36.50 shows ADA has more room to fall before entering oversold territory. Investors will need crypto-friendly news throughout the day to avoid a break under the trend line.

ADA Daily Chart sends bearish price signals.
ADAUSD 020923 Daily Chart

4-Hourly Chart

The 4-Hourly Chart affirms the bearish price signals. ADA must hold above the trend line and the $0.255 support band to target the 50-day EMA. A move through the 50-day EMA would signal a shift in sentiment. However, ADA and the broader market need a catalyst to shift bearish sentiment,

The 39.45 14-4H RSI shows ADA has more room to fall, with selling pressure outweighing buying pressure. A break under the trend line would give the bears a run at sub-$0.250.

4-Hourly Chart affirms bearish price signals.
ADAUSD 020923 4-Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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